Bank of Greece documents 27% drop in current account balance

21 June 2016
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The Bank of Greece has published its latest figures on the balance of payments for April 2016. In greater delail:

Current account

In April 2016, the current account showed a deficit of €822 million, down by €216 million year-on-year. This development is attributable to the decrease in the goods balance deficit and the improvement in the primary and the secondary income accounts, whereas the services balance surplus shrank.

The goods balance deficit fell by €276 million year-on-year, exclusively as a result of the lower net oil bill. Net payments for purchases of ships rose, as did the goods balance deficit excluding oil and ships, given that the relevant exports remained almost unchanged, while the corresponding imports increased slightly.

The services balance surplus declined by €307 million, mainly as a result of lower net sea transport receipts, which stood at €316 million, down from €669 million in April 2015. Travel receipts decreased by 7%, while non-residents’ arrivals declined by 3.5%. As a result, the travel balance deteriorated slightly. Finally, the other services balance showed a higher surplus year-on-year.

As a result of the above-mentioned developments, exports of goods and services fell by 19.5% and imports declined by 15.6%, so the balance of goods and services deficit eventually increased by €32 million.

The primary income account showed a surplus of €65 million, against a deficit of €111 million in April 2015, mainly as a result of reduced net dividend payments by €140 million. At the same time, the secondary income account showed a deficit of €48 million, down by €72 million year-on-year, mainly on account of the improved general government balance.

In the January-April 2016 period, the current account improved by €1.2 billion and showed a deficit of €3.1 billion. This development is mainly attributable to the improvement in the primary and secondary income accounts, as well as to the improvement in the goods and services balance. The latter recorded a deficit of €4.2 billion, down by €271 million year-on-year. Overall, the value of exports of goods and services fell by 20.5%, while the corresponding value of imports decreased by 17.1%.

The balance of goods deficit showed a decline of €1.2 billion in the January-April 2016 period, which is mainly attributable to the improved oil balance, as a result of lower oil prices. Moreover, net payments related to the sales and purchases of ships decreased, due to the fact that they are largely conducted outside the Greek banking system after the imposition of capital controls. Finally, it should be noted that both exports of goods excluding oil and ships, and the corresponding imports did not show any remarkable change.

The services balance surplus shrank by €875 million in the January-April 2016 period, as net transport receipts registered a significant decline, which is also largely attributable to capital controls. Net travel receipts also recorded a slight fall. These developments were offset to a small extent by an improvement in the other services balance. It should be noted that in the first four months of 2016 total non-residents’ arrivals decreased by 5.3% and the corresponding receipts by 3.4%.

The primary income account showed a surplus of €1.1 billion, up by €663 million year-on-year, on account of lower net interest, dividend and profit payments, as well as of lower payments for wages and salaries. This improvement offset the contraction in the surplus of the other primary income account. Finally, an improvement was also recorded in the secondary income account.

Capital account

In April 2016, no significant change was registered in the capital account, which showed a surplus of €676 million in the January – April 2016 period, up by €214 million year-on-year.

Combined current and capital account

In April 2016, the combined current and capital account (corresponding to the economy’s external financing requirements) showed a deficit of €835 million, down by €222 million year-on-year. In theJanuary-April 2016 period, the deficit shrank by €1.4 billion, to stand at €2.4 billion.

Financial account

In April 2016, no remarkable changes were recorded under direct investment.

Under portfolio investment, an increase of €537 million was recorded in residents’ net external assets, which is mainly attributable to a rise of €480 million in residents’ holdings of foreign bonds and Treasury bills. On the liabilities side, a decrease of €4 million was recorded, which is mainly accounted for by a fall in non-residents’ holdings of Greek government bonds and Treasury bills.

Under other investment, a decline of €452 million in residents’ assets is the net result of a decrease of €1.1 billion in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad, which was largely offset by the €642 million statistical adjustment related to the issuance of banknotes. The €725 million increase in liabilities mainly reflects the €698 million statistical adjustment.

A €846 million increase in non-residents’ deposit and repo holdings in Greece (the TARGET account included) was largely offset by a decrease of €819 million in the outstanding debt of the public and the private sector to non-residents (including principal payments of €447 million to the IMF).

In the January-April 2016 period, residents’ net assets from direct investment abroad rose by €470 million, while the corresponding liabilities that represent non-residents’ direct investment in Greece dropped by €31 million.

Under portfolio investment, an increase of €3.0 billion in residents’ net external assets is mainly due to a rise of €3.4 billion in their holdings of foreign bonds and Treasury bills. Moreover, residents’ net external liabilities grew by €87 million, mainly on account of a rise in non-residents’ investment in shares of Greek firms.

Under other investment, a decline in residents’ external assets largely reflects a decrease in resident credit institutions’ and institutional investors’ deposit and repo holdings abroad and the statistical adjustment related to the issuance of banknotes (1) . On the liabilities side, an increase of €3.5 billion was recorded, which is attributable to a rise in non-residents’ deposit and repo holdings in Greece (the TARGET account included), as well as a decrease of €2.2 billion in residents’ outstanding debt.

At end-April 2016, Greece’s reserve assets stood at €6.8 billion, compared with €5.9 billion in the corresponding month of 2015.

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